With many businesses looking to cut costs because of the effects of a global pandemic, it can be tempting to move marketing in-house and wave goodbye to the agency that may have served you well for many years. In-house marketing versus using an agency is an age-old debate that isn’t new since COVID. But before making the decision there are a few factors to consider. There are pros and cons to both routes and the best decision will lie in considering and aligning your business goals and budgets.
For clarification, an in-house marketing approach means your marketing team belongs to your company’s payroll. Whereas a marketing agency is a service provider you are likely to hire on a contractual retainer basis.
Having worked in an internal marketing team in a large corporate for over 10 years and then as a marketing agency owner for a further 10 years, it places me in a position to give my personal (and honest) views on the issue – based on first-hand experience.
So here are my ‘warts and all’ pros and cons of hiring in-house versus contracting a marketing agency and the 6 aspects to consider.
The right skillset
Staying on top of marketing & consumer trends is key to your business staying competitive in a saturated market. What worked last year may not be as effective this year – especially when it comes to digital marketing and what consumers expect. Tools and technology change rapidly and your marketing team has to continuously upskill themselves to stay relevant. The right mix of marketing skills can be a complex issue, especially with budget constraints.
It’s not easy to find a positive argument for in-house when it comes to skills. Unless you have the appetite for a big salary bill, it’s going to be difficult to find the right mix of skills you need to execute your marketing strategy. With so many digital platforms one (or even two) people can’t be skilled enough to get good results. At best, you’ll end up executing mediocre marketing that is not likely to deliver a decent ROI.
An agency has a team of individuals with specialised skills who don’t need to be a jack of all trades and master of none. Your business will have access to these skills – when you need them. Just make sure your retainer agreement allows you the flexibility to utilise them as your needs or strategy change.
This is sometimes a good option – especially for smaller marketing budgets. Get the agency to write the strategy and then decide what can be effectively executed in-house versus what requires specialised skills. Just don’t be tempted to get a marketing coordinator to design graphics or run your paid ad campaigns. Unless they are trained and certified to do so, you will waste ad spend and hurt your brand identity.
Enough creativity to come up with original ideas that align with your brand.
The need for good creativity can’t be underestimated. Consumers are bombarded with advertising so to stand out your marketing needs to be clear and clever.
Coming up with a new of concepts and ideas that will break through the advertising clutter requires the efforts of a team of creative people, so this is a hard one to solve if your team consists of one designer. Creative people also need to be stimulated and working on one brand day in and day out will eventually force them out the door. It often results in high staff turnover, so be prepared to interview and retrain every 2 years.
An agency often has a diverse group of skilled creatives who are trained in not only their specialised field but who also understand the importance of ensuring the creative is aligned with the brand’s identity, positioning, and promise.
When considering creativity, a hybrid model works well with a franchise model where the brand has a local presence and advertising needs continuous, small adaptions. The agency creates the concept, designs the various elements required and the in-house resource can provide a DTP service to the franchise network for local advertising.
The right tools to execute and measure
With so many apps and SAAS (Software As A Service) solutions available, it can be hard to know what the best solution for your needs are. You need slick processes, easy execution (with some automation), and a way to measure success.
In many cases, SAAS solutions are designed to cost less, the more users or functionality you pay for. Often the solutions you need are designed with agencies in mind and fee structures lean towards favouring many users. Your team would also need to be trained to use the tools effectively – that’s not a difficult problem to solve but bear in mind someone needs to be managing which tools you are getting the maximum return on and which are simply ‘nice to haves’. With so much choice it can take years of trial and error before you find the right combination.
An agency that has been around for a while will have tried and tested tools in place that work for their processes, execution, and measurement. They pay the agency subscription and invite clients on as users for a much lower fee (often this is built into the retainer so you don’t pay extra).
It’s likely that the agency will influence the set of apps required as it would need to integrate into their business easily. This would cut out the guesswork for the client.
The capacity you need all year round
Capacity is another consideration because as your business requirements change you may need to up or downscale. Most businesses also have cyclical trends that dictate how much capacity is needed in certain months of the year.
It becomes difficult to manage capacity when people are employed by the business because once you hire you need to be maximising productivity all year round. The positive is that are only working for you and you have control over what they do so turnaround times can be shortened.
Agencies can build capacity fairly quickly as they acquire more clients. Because staff work on multiple accounts the load can be shared where there is an overlap of skill sets. Processes are imperative to a well-functioning agency and sometimes agreement of a deadline can be a challenge. What may be urgent for a client may not be possible for the agency to attend to immediately as they have many deadlines to juggle. But a mutual understanding and respect for systems both ways will go a long way to managing this tension.
In a hybrid model, the load is shared so capacity becomes the smallest challenge. As long as the right people are given the tasks they are best equipped to handle, it’s a win-win for both the client and agency.
Intimate knowledge of the company
No one knows the operations of a company and its brands better than the client. Inside knowledge is critical for an agency to apply its brand and marketing expertise so that the business has the best opportunity for success.
Employees are firmly entrenched in your business. They know how the sales, service, and operation departments function and have intimate knowledge of the products or services, customers and competitors. They are 100% focused on your brand and will eat, sleep, and breathe it. There is definitely value in that. An in-house team working with no outside influence may however become inward-focused and make decisions based on their biased and unbalanced opinions.
An agency will always need client input, so it’s imperative to provide them with an internal person that is senior enough to understand what is happening at the top level as well as down in the trenches. Someone that understands the sales process, has good customer insights and product knowledge. The agency needs to know what they are marketing but the client’s input can never be discounted. We’ve seen the biggest ROI when clients pay an active interest in their marketing and don’t expect the agency to operate as lone rangers.
Based on the comment above, it’s obvious that the agency model is also a hybrid model because the client and agency should be linking internal knowledge with marketing best practices.
The model that delivers the best ROI
The ROI has to be measured against sales and/or brand awareness – not only by your payroll or the agency bill. The simple reason for marketing is to grow your business and if it’s not, then the model may need to change. You shouldn’t care too much about how much marketing costs but rather on the return you are getting.
Employing an in-house marketing team could cost you more than R200 000 a month for a team of five, skilled individuals that are dedicated to your serving your brand. However, you can decrease that fixed cost by adopting a hybrid model where you have fewer people on your payroll and let the agency take care of the strategy and specialised execution.
It’s not a ‘one fits all’ answer because there are too many complexities to consider. You will need to make an initial decision once you’ve weighed up all 6 areas we’ve already touched on, and then test it. It may take time to find the ‘perfect’ solution that best fits your needs but you know that in business, nothing stays the same. So as markets and competitors change, so too will your business and then the marketing function may need to be adjusted.
In our experience, it’s the hybrid model that works best. Client and agency working together with the same clear goals that can be measured against targets. And as this relationship develops it means a win-win all around!
We would love to hear your views or experience on in-house vs hiring a marketing agency. Leave us a comment below.